Influenced by the success and popularity of Varishtha Pension Bima Yojana 2003 and Varishtha Pension Bima Yojana 2014 schemes, and to protect elderly people aged 60 years and above in the falling interest regime, the Modi government recently announced the launch of a simplified scheme of assured pension, called Pradhan Mantri Vaya Vandana Yojana (PMVVY). The scheme is currently being implemented through the Life Insurance Corporation (LIC) of India and is slated to be formally launched by Finance Minister Arun Jaitley in New Delhi on Friday.
As per the scheme, on payment of an initial lump sum amount ranging from a minimum purchase price of Rs 1,50,000 for a minimum pension of Rs 1000 per month to a maximum purchase price of Rs 7,50,000 for a maximum pension of Rs 5,000 per month, subscribers will get an assured pension based on a guaranteed rate of return of 8% per annum, payable monthly.
Here are 10 things to know about the scheme:
1. The Pradhan Mantri Vaya Vandana Yojana is a pension scheme announced by the Government of India exclusively for senior citizens. It will be available from 4th May, 2017 to 3rd May, 2018.
2. One can subscribe to the PMVVY Pension Scheme offline as well as online through the Life Insurance Corporation of India.
3. PMVVY Pension Scheme provides an assured return of 8% p.a. payable monthly (equivalent to 8.30% p.a. effective) for 10 years.
4. Pension is payable at the end of each period, during policy term of 10 years, on monthly/ quarterly/ half-yearly/ yearly basis as chosen by the pensioner.
5. Death Benefit: On the death of the pensioner during the policy term of 10 years, the purchase price shall be refunded to the beneficiary.
6. Maturity Benefit: On survival of the pensioner to the end of the policy term of 10 years, purchase price along with final pension installment shall be payable.
7. Eligibility Conditions and Other Restrictions:
Minimum Entry Age: 60 years (completed)
Maximum Entry Age: No limit
Policy Term: 10 years
Minimum Pension: Rs 1,000 per month
Rs 3,000 per quarter
Rs 6,000 per half year
Rs12,000 per annum
Maximum Pension: Rs 5,000 per month
Rs 15,000 per quarter
Rs 30,000 per half year
Rs 60,000 per annum
8. Payment of Purchase Price
The scheme can be purchased by payment of a lump sum purchase price. The pensioner has an option to choose either the amount of pension or the purchase price.
The minimum and maximum purchase price under different modes of pension will be as under:
Mode of Pension Minimum Purchase Price Maximum Purchase Price
9. Loan: Loan facility is available after completion of 3 policy years. The maximum loan that can be granted shall be 75% of the purchase price.
The rate of interest to be charged for loan amount shall be determined at periodic intervals. For the loan sanctioned in Financial Year 2016-17, the applicable interest rate is 10% p.a. payable half-yearly for the entire term of the loan.
Loan interest will be recovered from pension amount payable under the policy. The loan interest will accrue as per the frequency of pension payment under the policy and it will be due on the due date of pension. However, the loan outstanding shall be recovered from the claim proceeds at the time of exit.
10. Taxes: Statutory Taxes, if any, imposed on this plan by the Government of India or any other constitutional Tax Authority of India shall be as per the tax laws and the rate of tax as applicable from time to time. The amount of tax paid shall not be considered for the calculation of benefits payable under the plan.
Source: Financial Expres